Canadian Lawyer

42 www.canadianlawyermag.com should also be top of mind — Fuerst says she's seen cases where the amount purchased didn't adequately reflect the risk. There have also been several oppression remedy-type claims or shareholder disputes — "I've got two or three on my desk right now," Linley says — and there's been a series of high-profile cases involving claims of misrepre- sentation and non-disclosure, which he expects to increase. People got into the industry when the hype about possibilities was at its peak, and some shareholders are now more disappointed than they would have otherwise been. "Some companies were started with an entrepreneurial focus, and the usual corporate governance and shareholder agreements and other things that can help in the event of a dispute per- haps are not as well developed as they should be," Linley says. "Entrepreneurs want to get a point quickly and that's a good thing, but they also need to stop and think how lawyers can assist them with making sure all the interests of the stakeholders are protected." Fuerst also points to "higher-risk" disclosure practices she's seen — many securities class actions arise at least in part out of comments made on investor calls resulting in allega- tions of misrepresentation. "There was a lot of hype in the financial press, a bunch of hype in the market, and, unfortunate- ly, some of that hype ended up being misplaced," she says. "I think it's going to level out as we go down the path of the industry maturing, compa- nies gaining more experience in terms of disclo- sure obligations and having a better sense of how the market is actually operating." Linley agrees that litigation will likely stabi- lize, but he also foresees the possibility of new waves of it. "A lot of players in the cannabis industry, in particular licensed producers, have been late to getting into protecting their intellectual property, for example," he says, adding that, as steps are taken to protect it, more litigation will be generated. Potential future conflict could stem from clearer law around protections provided to de- rivatives of cannabis products and the possibili- ty of takeovers and other consolidation mergers in years to come. Linley also predicts a growing product lia- bility base, the other big piece of the litigation puzzle that runs parallel to cases in the phar- maceutical industry. He calls it "somewhat in- evitable" that plaintiff counsel will eventually look for opportunities. "The one that's really interesting to watch right now and that I think is going to take on increased prevalence in the coming months is around vaping — there's been a lot of fo- cus more broadly with regards to vaping and its safety," he says, noting that it's something they're closely watching at Blakes from a prod- uct liability perspective. Linley says that, despite the volatility, the industry remains an exciting one, with a lot of potential and many smart, sophisticated peo- ple involved. "There are growing pains," he acknowledges. "But we're getting through them together." LEGAL REPORT LITIGATION LITIGATIONBOUTIQUE.COM WE CAN HANDLE ANY PITCH. WOODS LLP LITIGATION . ARBITRATION . INSOLVENCY 2000 McGILL COLLEGE AVE., SUITE 1700, MONTRÉAL (QUEBEC) H3A 3H3 T. 514 982-4545 CANNABIS USE AS PERCENTAGE OF ADULT POPULATION Newfoundland 24.2% Prince Edward Island 25.8% Nova Scotia 32.8% New Brunswick 23.7% Quebec 11.5% Ontario 16.9% Manitoba 17.3% Saskatchewan 17.2% Alberta 18.8% British Columbia 20.4% *Source: Third quarter 2019, StatsCan

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